Why You Shouldn’t Use A Bank To Transfer Money Overseas
Making an overseas money transfer via a bank is like using cash in Singapore these days – while it may look like the most commonsensical thing to do, it is a little “backward” compared to what everyone else in the world is doing.
Going to the bank when you need to make an overseas money transfer seems to be the obvious solution, but many of us also worry about the amount of total fees and charges we’ll incur for the transfer. So while many of us continue to shop around for the best mortgage deals and insurance and make comparisons across products, why shouldn’t the same be done for money transfers?
Let us first look at the downside of using a bank for transferring money abroad:
Transfer Fees and Charges
Try to search for overseas bank transfer fees online and you may find yourself faced with lieu of charges that do not quite specify how much exactly you will be paying for your transfer. From what we found, here are the few types of fees banks can charge on a single transfer:
- Handling commission – 1/8%, minimum S$30 maximum S$100
- Commission in lieu – 1/8% minimum USD10 maximum USD700
- Cover Cable – S$20
- Overseas bank charges – SGD50
Please note that this is just a sample rate from Standard Chartered as different banks charge differently. So let’s say you want to transfer an amount of S$2,000 to your daughter studying in Australia, the fees you will pay according to the rates above will be:
$30 + S13.50 + $20 + $50 = $113.50
This is not taking into consideration the exchange rate losses you will suffer.
As you can see, that’s about a minimum of 5.6% in fees and charges for a one-time transfer. But do you have other alternatives? Of course you do!
There are now a number of other money transfer platforms you can use that charges way less than a bank, and offers an exchange rate closer to the mid-market rate. Let us look at the fees you need to pay using one such money transfer provider, TransferWise.
We used their site for a simulation of how much fees we’ll have to pay if we make a transfer of $2,000 to Australia, and it appears that we’ll incur a fee of $13.90. That’s a saving of close to $100! Are you convinced yet that you have better choices other than a bank for money transfer services?
Money Transfer Tracking
When you transfer an amount of money overseas, you’d want to ensure that it reaches the intended recipient safely and in a prompt manner. For most banks, you will only be able to know that the money has been transferred when you check your debit account. The time needed for the transfer is also dependent on your sending bank, as well as the beneficiary’s bank.
When you use a money transfer provider, you can expect to have some form of tracking service to help you find out where your money is at which point in time. For instance, TransferWise has a mobile app that helps you do that, and you’ll also be updated via email at each stage of the transfer.
Whether you choose Paypal, Forex brokers or money transfer specialists, it is good to know that most of these options provide a more competitive money transfer rate compared to your traditional banks. Not only do you save a substantial sum on fees and charges, most of these options are more transparent as well in terms of the exchange rate they use on your transfer and on all the fees involved in your transfer. Check out our money transfer page for more options that suit your needs!